MARKET UPDATE - SEPTEMBER 2021

Rising Covid-19 cases in many parts of the world, as well as storms such as Hurricane Ida and the lingering effects of typhoons in Asia, continue to add to an already constrained shipping market.  Capacity remains tight and rates continue to face upward pressure.  Below are highlights of recent market trends and information by mode:


Trucking:

  • Spot Load Postings flat from July to August 2021
  • Spot Load Postings for August 2021 were up 33% compared to those from August 2020
  • When comparing load-to-truck ratios for August 2021 vs August 2020, Van ratios were up 18%, Flatbed up 38% and Reefer up 57%
  • In August 2021, spot rates were up 24% on Van, 34% on Flatbed and 29% on Reefer compared to August 2020
  • Van and reefer rates reached all-time highs once again in August 2021.  Flatbed rates were about 3% off their all-time highs
  • Diesel fuel remained at elevated levels, as it has increased 40% since October 2020
  • Current predictions are indicating that trucking rates will be up again in 2022, likely establishing new highs again for the industry


Ocean:

  • For Asia to North America, an August 15th GRI was implemented, with others expected in early September.  Space is already severely under capacity, and congestion is expected to worsen due to severe weather, Covid-related disruptions and pre-holiday demand
  • For Asia to Europe, rates remain at record-high levels but were at least stable for August.  Rates may hold for some of September but may increase later in the month.  Severe equipment shortages are being faced across all Asia origins and shippers are seeing many containers being rolled to later sailings
  • Rates for Europe to North America remain at record high levels and are expected to climb further in Q4.  Congestion at destination ports is expected to worsen and not ease until at least the end of the year, especially at the USWC and USGC destinations
  • For India to North America, rates are expected to continue rising throughout September.  Space remains extremely constrained, and there is a lack of equipment available at the various ports and inland depots
  • Rates out of North America to Asia incurred another GRI on September 1st.  Space is still tight for USWC but has improved for USEC.  There is a deficit on containers and chassis at most inland ramps, however, equipment at ports is not much of an issue
  • For North America to Europe, rates are holding steady.  Capacity is the tightest out of the USWC, but ample capacity seems available from USEC and USGC
  • Booking is recommended 5+ weeks in advance in the following lanes:
    • Asia to North America
    • Asia to Europe
    • Europe to North America
    • North America to Asia
  • Booking is recommended 4+ weeks in advance in the following lanes:
    • India to North America
    • North America to Europe (4 weeks USEC/USGC, 4-6 weeks USWC)


Air Freight:

  • Asia:  Capacity continues to be an issue throughout Asia, and rates are expected to remain at higher levels with increases expected out of several major hubs, including Shanghai, Hong Kong and Taipei.  Shanghai continues to operate at very low capacity with no timeline on a return to normal operations.  Shanghai to US transit times have been extended by 5-7 days, while Asia to Europe transit times are expected to extend by 3-5 days.  Hong Kong transit times are also expected to increase
  • Europe:  Rates remain stable as factories begin re-opening after the August holidays and as the Q4 peak approaches.  While no additional capacity has been added, there appears to be adequate coverage to handle the demand.  Bookings to Shanghai are volatile and the rates appear to be heading upward.  Bookings are still recommended at least 7 days in advance for optimal rates/routings
  • Americas:  The 100% screening on US export airfreight cargo has created additional backlogs.  US export demand remains steady.  Larger shipments are taking 2-4 days from booking to uplift to key European and Asian destinations.  Over 30% of flights to Shanghai have been cancelled due to operational issues at destination.  Space to India is manageable, while Nepal, Bangladesh and Indonesia are still constrained due to relief efforts to those regions.  Ground handlers at LAX/ORD/JFK are reporting 2-5 day backlogs on imports


Parcel:

  • FedEx and UPS continue to apply the COVID/Peak surcharges on international shipments (the costs vary, starting at around $0.10/lb on most shipments, but substantially higher out of places like China and Hong Kong with those continuing to rise).  On August 23rd, FedEx increased the charge to several countries, including the Oceania region as well as China and some other Asian countries
  • FedEx currently charges the following Peak Surcharges (effective until replaced by the below mentioned changes):
    • Residential Delivery:  $0.60 per package
    • Additional Handling:  $3.50 per package
    • Ground Economy Surcharge:  $1.00 per package
    • Oversize:  $30 per package
  • FedEx has announced their “Holiday” Peak Surcharges as follows (effective 10/4/21 to 1/16/22):
    • Additional Handling = $5.95 per package
    • Oversize Charge = $62.50 per package
    • Ground Unauthorized Charge = $350 per package
  • In addition, FedEx has also announced the following changes to some of their other Peak Surcharges:
    • Ground Economy Surcharge:  11/1/21-11/28/21 = $1.50 per pkg, 11/29/21-12/12/21 = $3.00, 12/13/21-1/16/22 = $1.50
    • Residential Delivery Charge, effective 11/1/21-1/16/22 (for customers who ship more than 25K weekly residential packages):
    • On 1/17/22, the Residential Delivery Charge will revert back to $0.60
  • UPS announced a staggered increase on their Peak Surcharges with the first effective back on July 4th, followed by another increase on October 3rd:
  • The high-volume (any shipper with 25K+ shipments in any week after February 2020) UPS Ground Residential and SurePost Surcharge will remain at $0.30 per package through October 30th.  Effective October 31st, the surcharge will include Air Residential shipments and increase exponentially depending on each shipper’s peak volume levels:
  • Due to capacity issues, UPS and FedEx have trended towards limiting or shifting away from certain lower-margin portions of the business and focusing on more profitable accounts
  • Western US parcel carrier OnTrac announced that, as of September 1st, they will not accept any additional business as they have already reached levels beyond peak 4th quarter capacity
  • The USPS raised the costs of its mail services on August 29th.  Stamps increased from $0.55 to $0.58, and general mail products increased by an average of 6.6%
  • As shippers continue to look towards regional providers to help cover their parcel shipment needs, some of these carriers are looking towards expansion.  LaserShip, who recently extended their service offerings to include Tennessee as well as several other zip codes, is looking to expand to Chicago and possibly Texas, along with broadening their coverage in several existing states.  LSO plans to expand into Missouri, Illinois and Kansas in early September as well as grow their coverage in Louisiana, Oklahoma and Arkansas


Data2Logistics has a dedicated “Professional Consulting Services” team that can help you identify opportunities across all modes.  We provide various services such as data metrics/analytics, market studies, carrier strategy/negotiation, etc.  For more information, please contact Jeremy Levesque at jeremy.levesque@data2logistics.com or 704-992-8016.